EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") is made
this 6th day of April, 1998, by and between Xxxxxx X. Xxxxxxx (the "Employee")
and Installation Technicians, Inc., a Missouri corporation (the "Employer"), and
Dycom Industries, Inc, a Florida corporation (the "Company").
1. Employment and Service on the Board of Directors. Subject
to the terms and conditions hereof, as of the "Effective Time", as this term is
defined in that certain Agreement and Plan of Merger (the "Merger Agreement")
dated February 23, 1998 and executed, by the Employer, the Company and the
Stockholders (as defined in the Merger Agreement), the Employer hereby agrees to
employ the Employee as the Employer's President and Chief Executive Officer to
perform such specific duties and have such responsibilities as the board of
directors of the Employer (the "Board of Directors") may from time to time
establish; provided, however, that such duties shall be consistent with the
duties and responsibilities typically accorded to a president and chief
executive officer. The Employee hereby accepts employment by the Employer as
President and Chief Executive Officer, subject to the terms and conditions
hereof, and agrees to devote his full business time and attention to his duties
hereunder, to the best of his abilities. While an employee of the Employer, the
Employee shall also serve as a member of the Board of Directors during the term
of this Employment Agreement.
2. Term of Employment; Certain Definitions.
(a) The term of the Employee's employment pursuant to this
Employment Agreement shall commence as of the Effective Time and shall terminate
upon the earlier of (i) termination pursuant to paragraph 5 hereof or (ii) the
fifth anniversary of the Effective Time. The foregoing notwithstanding, in the
event that the Merger Agreement is terminated, or the transactions contemplated
pursuant to the Merger Agreement are abandoned, then this Employment Agreement
shall be terminated and it shall have no further force or effect.
(b) "Post-Employment Period" means the period commencing on
the date of the Employee's termination of employment (or the date the Employee
is determined to be Disabled, as such term is hereinafter defined) and ending on
the earlier of the third anniversary of such termination of employment or the
expiration of the term of this Employment Agreement; provided however, the
Post-Employment Period will not end prior to the first anniversary of the
Employee's termination of employment.
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(c) "Prior Year Bonus" means the amount of any bonus earned by
the Employee with respect to services rendered during the prior fiscal year of
the Employer, regardless of when such bonus is paid.
3. Compensation, Benefits and Expenses.
(a) During the term of the Employee's employment pursuant to
this Employment Agreement, the Employee shall be paid a base annual salary of
$260,000 (the "Base Pay"). Payment will be made on the regularly scheduled pay
dates of the Employer, subject to all appropriate withholdings or other
deductions required by law or by the Employer's established policies applicable
to all the Employees of the Employer. The Employer may increase the Employee's
Base Pay at the Employer's sole discretion, but shall not reduce the Base Pay
below the rate established by this Employment Agreement without the Employee's
written consent.
(b) In addition to any other compensation payable to the
Employee pursuant to this Employment Agreement, during the term of the
Employee's employment pursuant to this Employment Agreement the Employee may be
paid an annual bonus as determined by and within the sole discretion of board of
directors of the Company.
(c) The Employee's services hereunder shall be performed at
the principal offices of the Employer in the southwestern Missouri area, subject
to travel that is consistent with prior practice of the Employee.
(d) In addition to compensation payable to the Employee as
described above, the Employee shall be entitled to participate in all the
employee benefit plans or programs of the Company as are available to management
employees of the Employer generally and such other benefit plans or programs as
may be specified by the Board of Directors, including any stock options that may
be granted by the board of directors of the Company ("Employee Benefits").
Employee Benefits provided the Employee will be no less favorable in the
aggregate than those benefits of the Employer in which the Employee was enrolled
immediately prior to the Effective Date. With respect to the Employee, the
Employer and the Company hereby waive any applicable waiting period for the
Employee Benefits.
(e) On a timely basis, the Employer shall reimburse the
Employee for such reasonable out-of-pocket expenses as the Employee may incur
for and on behalf of the furtherance of the Employer's business, provided that
the Employee submits to the Employer satisfactory documentation or other support
for such expenses in accordance with the Employer's expense reimbursement
policy.
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4. Covenants of the Employee.
(a) While employed by the Employer, the Employee shall not
directly or indirectly engage in any business, whether as a proprietor, partner,
joint venturer, employer, agent, employee, consultant, officer or beneficial or
record owner of more than one percent of the stock of any corporation or
association of any nature which is competitive to the business conducted by the
Employer, the Company, or any of the Company's other wholly owned subsidiaries.
(b) At no time will the Employee divulge or appropriate to the
Employee's own use or to the use of others any trade secrets or confidential
information or confidential knowledge pertaining in any to the business of the
Employer, the Company or any of the Company's other wholly owned subsidiaries.
(c) In the event the Employee breaches this Employment
Agreement (including, without limitation, by terminating his employment without
Good Reason (as hereinafter defined)) or if the Employee's employment is
terminated for Cause (as hereinafter defined), the Employee separately agrees,
being fully aware that the performance of this Employment Agreement is important
to preserve the present value of the property and business of the Employer and
the Company, that during the Post-Employment Period, the Employee shall not
directly or indirectly engage in any business, whether as proprietor, partner,
joint venturer, employer, agent, employee, consultant, officer or beneficial or
record owner of more than one percent of the stock of any corporation or
association of any nature which is competitive to the business conducted by the
Employer or any of the Company's other wholly owned subsidiaries in the
geographical service area of the Employer or any of the Company's other wholly
owned subsidiaries, determined as of the date of the Employee's termination of
employment. Within such geographical service areas and during such non-compete
period, the Employee shall not solicit or do business competitive to the
business conducted by the Employer or any of the Company's other wholly owned
subsidiaries, with any customers, partners or associates of the Employer or any
of the Company's other wholly owned subsidiaries. The foregoing notwithstanding,
the Employee may continue to hold his existing ownership interest, determined as
of the Effective Time, of Holland Telecommunications Group , Inc., but may not
directly or indirectly increase such ownership interest or engage actively in
the management or business activities of such corporation.
(d) The Employee agrees that the breach by the Employee of any
of the foregoing covenants is likely to result in irreparable harm, directly or
indirectly, to the Employer and the Company. The Employee, therefore, consents
and agrees that if the Employee violates any of such covenants, the Employer and
the Company shall be entitled, among and in addition to any other rights or
remedies available under this Employment Agreement or at law or in
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equity, to temporary and permanent injunctive relief to prevent the Employee
from committing or continuing a breach of such covenants.
(e) It is the desire, intent and agreement of the Employee and
the Employer that the restrictions placed on the Employee by this paragraph 4 be
enforced to the fullest extent permissible under the law and public policy
applied by any jurisdiction in which enforcement is sought. Accordingly, if and
to the extent that any portion of this paragraph 4 shall be adjudicated to be
unenforceable, such portion shall be deemed amended to delete therefrom or to
reform the portion thus adjudicated to be invalid or unenforceable, such
deletion or reformation to apply only with respect to the operation of such
portion in the particular jurisdiction in which such adjudication is made.
(f) Except with respect to the equitable relief contemplated
under paragraph 4(d), any controversy or claim arising out of or relating to
this Employment Agreement shall be settled by arbitration in Palm Beach County,
Florida in accordance with the rules then in effect of the American Arbitration
Association, and judgment upon the award rendered may be entered in any court
having jurisdiction thereon. The prevailing party in any such arbitration will
be entitled to an award of its attorney fees and may recover fees and costs
incurred enforcing an arbitration award.
5. Termination.
(a) The Employer shall have the right to terminate the
Employee's employment at any time and for any reason. If the Employee is
terminated for Cause, the Employer shall have no obligation to pay the Employee
any Base Pay or other compensation or to provide any Employee Benefits
subsequent to the date of the Employee's termination of employment. Termination
for "Cause" shall mean termination of employment for any of the following
reasons:
(i) the Employee entering a plea of no-contest with respect
to or being convicted by a court of competent and final
jurisdiction of any crime, whether or not involving the
Employer, that constitutes a felony in the jurisdiction
involved;
(ii) the Employee committing any act of fraud,
misappropriation, embezzlement, unethical business
conduct or other act of dishonesty against the Employer
or the Company, or materially breaching a fiduciary
obligation thereto; or
(iii) the Employee materially breaching this Employment
Agreement or failing or refusing to perform any of his
duties as required by this Employment Agreement in any
material respect.
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(b) Unless otherwise terminated earlier pursuant to the terms
of this Employment Agreement, the Employee's employment under this Employment
Agreement will terminate upon the Employee's death and may be terminated by the
Employer or the Employee upon giving not less than thirty days written notice to
the other in the event that the Employee, because of physical or mental
disability or incapacity, is unable to perform the Employee's duties hereunder
for an
aggregate of one hundred eighty working days during any twelve-month period
("Disabled"). All questions arising with respect to whether the Employee is
Disabled shall be determined by a reputable physician mutually selected by the
Employer and the Employee at the time such question arises. If the Employer and
the Employee cannot agree upon the selection of a physician within a period of
seven days after such question arises, then the Chief of Staff of Good Samaritan
Hospital in West Palm Beach, Florida shall be asked to select a physician to
make such determination. The determination of the physician selected pursuant to
the above provisions of this paragraph 5(b) as to such matters shall be
conclusively binding upon the parties hereto. If the Employee is determined to
be Disabled, the Employer shall provide the Employee with the Severance
Benefits. The "Severance Benefits" means (i) prompt payment of any unpaid Base
Pay earned through the date of the Employee's termination and a pro rata bonus
with respect to the fiscal year of the Employer in which the Employee's
employment terminates determined by multiplying the Prior Year Bonus by a
fraction, the denominator of which is 365 and the numerator of which is the
number of days of the Employer's fiscal year preceding the date of such
termination, (ii) payment each month during the Post-Employment Period of an
amount equal to one-twelfth of the sum of the Employee's Base Pay and Prior Year
Bonus, and (iii) providing the Employee and his eligible dependents with medical
and dental benefits during the Post-Employment Period upon the same terms and
conditions as if the Employee were still employed by the Employer.
(c) The Employee may terminate his employment for Good Reason.
For purposes of this paragraph 5, "Good Reason" shall mean the following:
(i) the Employer failing to pay any portion of the
Employee's Base Pay or failing to provide the Employee
any Employee Benefits due the Employee hereunder;
(ii) the Employer discharging the Employee without Cause;
(iii) the Employer materially breaching any other agreement
with the Employee;
(iv) the Employer materially and inappropriately changing
the duties and responsibilities of the Employee;
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(v) the Employer transferring the Employee from the
southwestern Missouri area without the Employee's
consent; or
(vi) the merger of the Employer with, or the sale of a
majority of the stock of the Employer to, or the sale
of substantially all of the assets of the Employer to
any person, corporation or other business entity that
is not affiliated with or controlled by the Company.
If the Employee shall terminate his Employment for Good Reason, provided that
the Employer does not also have grounds to terminate his Employment for Cause,
the Employee shall not be liable to the Employer for any damages as a result
thereof and shall not be bound by the provisions of paragraph 4(c) hereof.
Furthermore, the Employer shall provide the Employee with the Severance
Benefits.
(d) In the event the Employer terminates the Employee's
employment without Cause, the Employer shall provide the Employee with the
Severance Benefits.
(e) In the event that it is determined by an independent
accounting firm designated by the Company that any amount payable to the
Employee under this Employment Agreement, alone or when aggregated with any
amount payable to the Employee pursuant to any other plan or arrangement of the
Employer or the Company (collectively, the "Parachute Payments"), would
constitute an "excess parachute payment" within the meaning of Section 280G of
Internal Revenue Code of 1986, as amended (the "Code"), then the aggregate
present value of the Parachute Payments shall be reduced to the amount,
expressed as a present value, which maximizes the aggregate present value of the
Parachute Payments without causing any such payment to be nondeductible by the
Employer or the Company under Section 280G of the Code; provided, however, that
the Parachute Payments will not be reduced if the Employee's net after-tax
income with respect to the Parachute Payments absent such reduction would exceed
the Employee's net after-tax income with respect to the Parachute Payments after
giving effect to such reduction.
6. Assignment and Succession.
(a) The services to be rendered and obligations to be
performed by the Employee under this Employment Agreement are special and
unique, and all such services and obligations and all of the Employee's rights
under this Employment Agreement are personal to the Employee and shall not be
assignable or transferrable. In the event of the Employee's death, however, the
Employee's personal representative shall be entitled to receive any and all
payments then due under this Employment Agreement. The Employer may assign this
Employment Agreement to any subsidiary of the Employer or in connection with any
merger or consolidation involving the Employer or a sale of substantially all of
the assets of the Employer, as the case may be, provided
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that such successor shall assume (by contract or operation of law) all of the
Employer's obligations hereunder.
(b) This Employment Agreement shall inure to the benefit of
and be binding upon and enforceable by the Employer and the Employee and their
respective successors, permitted assigns, heirs, legal representatives,
executors, and administrators. If the Employer shall be merged into or
consolidated with another entity, the provisions of the Employment Agreement
shall be binding upon and inure to the benefit of the entity surviving such
merger or resulting from such consolidation. The Employer will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Employer, by agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Employment Agreement in the same
manner that the Employer would be required to perform it if no such succession
had taken place. The provisions of this paragraph 6(b) shall continue to apply
to each subsequent employer of the Employee hereunder in the event of any
subsequent merger, consolidation, or transfer of assets of such subsequent
employer.
7. Notices.
All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram or telex or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this paragraph 7):
if to the Employer or the Company:
Dycom Industries, Inc.
First Union Center, Suite 600
0000 XXX Xxxxxxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
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if to the Employee:
Xxxxxx X. Xxxxxxx
000 Xxxxxxxx Xxx Xxxxxxx
Xxxxxxxxxx Xxxx, Xxxxxxxx 00000
8. Waiver of Breach.
The waiver by the Employer or the Employee of a breach of any
provision of this Employment Agreement by another party shall not operate or be
construed as a waiver by any other party of any subsequent breach.
9. Amendment.
This Employment Agreement may be amended only by a written
instrument signed by all parties hereto.
10. Governing Law; Jurisdiction and Service of Process.
This Employment Agreement shall be governed by the laws of the
State of Delaware applicable to contracts executed in and to be performed in
that State.
11. Partial Invalidity.
The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
12. Entire Agreement.
All prior negotiations and agreements between the parties
hereto with respect to the matters contained herein are superseded by this
Employment Agreement, and there are no representations, warranties,
understandings or agreements other than those expressly set forth herein.
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IN WITNESS WHEREOF, the Employee and the Employer have entered
into this Employment Agreement as of the date set forth above.
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
INSTALLATION TECHNICIANS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
Solely in the capacity of guarantor of the Employer's
obligations under this Employment Agreement, the Company hereby executes this
Employment Agreement effective as of the date set forth above.
DYCOM INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X Xxxxxxx
Chairman and Chief Executive Officer
